I’m curious - why is that so? I would assume that with higher volatility there are more people participating in the futures markets, and the margina should be lower - not higher
Margins will be lower but the prices will still be higher.
In low vol periods: if stock is at $2, it is likely to stay at $2 since vol is low. So maybe a $3 option is worth 10 cents. But there are very few people in the market so there's going to be a large big-ask spread. Nobody's going to sell it at 10c; there are few other sellers so you can offer it at 15c and rip off the buyer since they have no choice.
At high vol periods everyone wants to be in the market so the price will actually be close to the 10c theoretical price - less spread (what you. All margin). But since there is high vol the stock is more likely to get to $3 so the option could be worth 20 cents instead of 10.
